White House eases more regulations on financial industry Lenders not liable for toxic damage

April 25, 1992|By Robert D. Hershey Jr. | Robert D. Hershey Jr.,New York Times News Service

WASHINGTON -- The Bush administration announced yesterday a second series of steps to lighten regulation of financial institutions. The action came as the White House moved toward a decision on whether to extend a 90-day moratorium on government regulations that expires Tuesday.

Indications are that the moratorium will be continued well into summer. It includes government-wide reviews of existing regulations and a freeze on new ones not involving health or safety.

President Bush, who has made deregulation a pillar of domestic policy this year, is expected to announce the extension of the moratorium in a Rose Garden ceremony Wednesday following further initiatives on transportation and securities to be announced early in the week.

Mr. Bush said yesterday that consumers and taxpayers "will save tens of billions of dollars" as a result of the moratorium, which began in January with the aim of reducing what the administration considers excessive regulation.

Yesterday, bankers generally agreed that the chief move by the administration was to issue a final rule by the Environmental Protection Agency to protect lenders from liability under Superfund legislation for environmental damage caused by their borrowers.

The rule, to take effect almost immediately, also protects government agencies from financial claims when they foreclose on polluted property or otherwise seize it.

Although the law provides an exception for lenders, some judicial rulings have clouded the issue, particularly one in which a court said that lenders could be held liable merely for having the "capacity to influence" management decisions.

The American Bankers Association said yesterday's action would help protect institutions that lend to such businesses as dry cleaners, gasoline stations and farms. "We're very glad to get this out of the pipeline," said Edward L. Yingling, government relations director for the trade group.

The administration also announced yesterday a program to reduce the costs of regulatory compliance by creating uniform examination policies, streamlining the applications process and otherwise reducing paperwork.

A current coordinator, known as the Exam Council, is considered largely ineffective in preventing inconsistent and duplicative bank audits.

The new body will be headed by William Taylor, chairman of Federal Deposit Insurance Corp., "a driver" who gets things done, said John E. Robson, the deputy Treasury secretary who, along with Vice President Dan Quayle, is leading the administration's deregulation efforts.

Other measures announced yesterday included a decision by the Federal Reserve Board to add non-banking activities to its list of things generally permissible for all banks.

These included securities brokerage, advice related to investments and mergers and acquisitions, and an expanded range of leasing transactions.

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